Sri Joseph Ratna Kumar, Hyderabad V. ACIT, Circle-6(1), Hyderabad

ITA 1105/HYD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5863 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 26-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Question of law
• Section: 143(3); 263

Judgement Text

ITA 1105 OF 2013 JOSEPH RATNA KUMAR HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1105/HYD/2013 (ASSESSMENT YEAR: 2001-02) SRI JOSEPH RATNA KUMAR HYDERABAD PAN: ADFPK 1384 B VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6(1) HYDERABAD FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SHRI K.R. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2001-02. IN TH IS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT (A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)( C) OF THE ACT. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS PERVERSE, ILLEGAL AND UNSUSTAINABLE IN LAW AND IN FACTS. THE FINDING OF THE COMMISSIONER (APPEALS) THAT THERE WAS NO REPRESENTATION ON BEHALF OF THE APPELLANT ON VARIOUS DATES INDICATED IN THE ORDER IS INCORRECT. 2. THE COMMISSIONER (APPEALS) ERRED IN DISMISSING THE APPEAL OF THE APPELLANT EX PARTE WITHOUT EVEN CONSIDERING VARIOUS SUBMISSIONS MADE BY THE APPELLANT IN QUANTUM AND PENALTY PROCEEDINGS. DATE OF HEARING : 24.10.2016 DATE OF PRONOUNCEMENT : 30.12.2016 ITA 1105 OF 2013 JOSEPH RATNA KUMAR HYDERABAD PAGE 2 OF 6 THE COMMISSIONER (APPEALS) OUGHT NOT TO HAVE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 3. THE COMMISSIONER (APPEALS) ERRED IN RELYING ON THE FINDINGS IN THE QUANTUM PROCEEDINGS WHEN IT IS A SETTLED LAW THAT PENALTY PROCEEDINGS ARE SEPARATE AND A FRESH LOOK HAS TO BE GIVEN TO THE MATERIAL ON RECORD. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS THE ISSUES ON WHICH PENALTY WAS LEVIED WERE HIGHLY DEBATABLE, THE CONFIRMATION OF THE PENALTY ORDER BY THE COMMISSIONER(APPEALS) IS INCORRECT AND UNSUSTAINABLE IN LAW. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE APPEAL MAY BE ALLOWED AND PENALTY BE DELETED. 2. FURTHER, VIDE LETTER DATED 10.03.2014, THE ASSESS EE HAS ALSO RAISED THE FOLLOWING ADDITIONAL GROUND OF APPE AL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE PENALTY ORDER PASSED BY THE AO IS AN INVALID ORDER IN THE ABSENCE OF DEMAND NOTICE. THE CIT (A) FAILED TO NOTICE THAT THE APPELLANT DID MENTION IN THE APPEAL BEFORE HIM THAT NO DEMAND NOTICE IS ENCLOSED AS THE SAME WAS NOT ISSUED BY THE AO AND ACCORDINGLY, OUGHT TO HAVE CANCELLED THE PENALTY ORDER FOR THE SAME REASON. 3. IN THE APPLICATION FOR ADMISSION OF ADDITIONAL G ROUNDS, THE ASSESSEE STATED THAT THE ASSESSEE HAS RECEIVED THE PENALTY ORDER WITHOUT THE DEMAND NOTICE AND THEREFORE, AT T HE TIME OF FILING THE APPEAL BEFORE THE CIT (A), THE ASSESSEE HAS SPECIFICALLY BROUGHT TO THE NOTICE OF THE CIT (A) THAT NO DEMAND NOTICE WAS ISSUED AND THEREFORE, THE SAME WAS NOT FILED ALONG WITH THE ITA 1105 OF 2013 JOSEPH RATNA KUMAR HYDERABAD PAGE 3 OF 6 PENALTY NOTICE. IT IS SUBMITTED THAT THE ASSESSEE H AD ASKED FOR INSPECTION OF RECORDS FOR ESTABLISHING THE FACT THA T NO DEMAND NOTICE WAS RAISED IN RESPECT OF THE PENALTY, THEREF ORE, THE PENALTY ORDER IS NON EST AND BAD IN LAW, BUT THE CIT (A) HAS NOT ALLOWED THE ASSESSEE TO INSPECT THE RECORDS AND HAS PASSED THE APPELLATE ORDER CONFIRMING THE LEVY OF PENALTY. IT IS SUBMITT ED THAT THE GROUND IN RESPECT TO ISSUE OF DEMAND NOTICE ALONG W ITH THE PENALTY ORDER GOES TO THE ROOT OF THE APPEAL AND TH EREFORE, THE ADDITIONAL GROUND OF APPEAL MAY BE ADMITTED. THE LE ARNED COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTI ON TO SECTION 156 OF THE ACT WHICH PROVIDES THAT WHEN ANY TAX, IN TERESTS, PENALTY, FINE OR ANY OTHER SUM, IF PAYABLE, IN CONS EQUENCE OF ANY ORDER PASSED UNDER THE ACT, THE AO SHALL SERVE UPON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM, SPECIFYI NG THE SUM SO PAYABLE. THUS, ACCORDING TO HIM, WHEN THE PENALTY O RDER IS NOT ACCOMPANIED BY THE DEMAND NOTICE U/S 156 OF THE ACT , THE PENALTY ORDER IS NOT SUSTAINABLE. SINCE THIS GROUND OF APPEAL IS ON THE QUESTION OF LAW, WE DEEM IT FIT AND PROPER TO A DMIT THE SAME. IT IS ALSO THE CASE OF THE ASSESSEE THAT THE CIT (A ) HAS NOT CONSIDERED THE ASSESSEES SUBMISSIONS IN THE PENALT Y PROCEEDINGS AND HAS ERRED IN CONFIRMING THE ORDER OF THE AO. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, WHO IS A CONTRACTOR FOR POST-TENSIONING OF BRIDGES & BUILDINGS, FILED HIS RETURN OF INCOME FOR THE A.Y 20 01-02 ON 30.10.2001 RETURNING INCOME OF RS.6,89,200. THE ASS ESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 31.03.2004. THER EAFTER, THE CIT U/S 263 OF THE ACT, REVISED THE ASSESSMENT ORDE R. WHILE GIVING ITA 1105 OF 2013 JOSEPH RATNA KUMAR HYDERABAD PAGE 4 OF 6 EFFECT TO THE ORDER OF THE CIT U/S 263 OF THE ACT, THE AO CONSIDERED ALLOWABILITY OF CLAIM OF TRANSPORT EXPEN SES OF RS.32,09,024 AND ALSO THE UNSECURED LOANS OF RS.2,0 8,940 AND UNCONVINCED BY THE ASSESSEES CONTENTIONS, BROUGHT THEM TO TAX. THE AO ACCORDINGLY COMPUTED THE TOTAL INCOME AT RS. 65,11,784 AND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE FILE D AN APPEAL BEFORE THE CIT (A), WHO GRANTED PARTIAL RELIEF TO T HE ASSESSEE AND ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE ASSESSEE RECEIVED SOME MORE RELIEF AND THE AO HAS ALSO GIVEN EFFECT TO THE ORDERS OF THE ITAT. MEANWHILE, THE AO INITIATED PENALTY PROCEEDIN GS AND LEVIED THE MINIMUM PENALTY OF RS.27,44,840. AGAINST THIS O RDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN 2 ND APPEAL BEFORE US. 5. AS REGARDS THE ASSESSEES PRELIMINARY AND ADDITI ONAL GROUND OF APPEAL THAT THE PENALTY ORDER IS NOT ACCO MPANIED BY THE DEMAND NOTICE AS REQUIRED U/S 156 OF THE ACT AND HE NCE IS NON EST AND VOID AB INITIO, WE ARE OF THE OPINION THAT IT IS ONLY AN IRREGULARITY AND AT THE MOST THE CONSEQUENCE WOULD BE THAT THE PENALTY ORDER CANNOT BE EXECUTED. BUT IT DOES NOT M AKE THE PENALTY ORDER NON EST OR VOID AS CLAIMED BY THE ASS ESSEE IN THE ADDITIONAL GROUND OF APPEAL. THE ADDITIONAL GROUND OF APPEAL IS ACCORDINGLY REJECTED. 6. AS REGARDS THE MERITS OF THE PENALTY ORDER IS CONCERNED, WE FIND THAT THE PENALTY ORDER HAVE BEEN PASSED ON THE BASIS OF THE FINDINGS IN THE ASSESSMENT ORDER. THE AO HAS OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVE HIS CLAIM OF ITA 1105 OF 2013 JOSEPH RATNA KUMAR HYDERABAD PAGE 5 OF 6 EXPENDITURE AT ANY STAGE DESPITE THE TIME TAKEN AT DIFFERENT STAGES OF ASSESSMENT AND THE APPEALS. THE AO COME TO THE C ONCLUSION THAT THE ASSESSEE HAS WILLFULLY CONCEALED THE PARTI CULARS OF THE INCOME AND THEREFORE LEVIED THE MINIMUM PENALTY OF RS.27,44,849. BEFORE THE CIT (A), THE ASSESSEE HAD FILED DETAILED SUBMISSIONS WHICH ARE REPRODUCED AT PAGES 67 TO 68 OF THE PAPER BOOK FILED BEFORE US AND ALSO THE ASSESSEE HAD ASKE D FOR EXAMINATION OF THE RECORDS AS PER LETTER PLACED AT PAGE 69 OF THE PAPER BOOK AND THE CIT (A) HAS REJECTED THE ASSESSE ES CONTENTION AND THE SAID LETTER IS PLACED AT PAGES 70 TO 71 OF THE PAPER BOOK. THUS, IT IS THE CASE OF THE ASSESSEE THAT NEITHER T HE AO NOR THE CIT (A) HAVE EXAMINED THE ASSESSEES CONTENTIONS DU RING THE PENALTY PROCEEDINGS AND HAVE SUMMARILY REJECTED THE SAME WHICH IS NOT SUSTAINABLE. 7. HAVING GONE THROUGH THE SUBMISSIONS OF THE ASSES SEE BEFORE THE AO AND THE CIT (A) DURING THE PENALTY PR OCEEDINGS AND ALSO THE PENALTY ORDER AND THE ORDER OF THE CIT (A) , WE FIND THAT THE ASSESSEES CONTENTIONS HAVE NOT BEEN DEALT WITH AT ALL BY BOTH THE AUTHORITIES BELOW. WE AGREE WITH THE ASSESSEES CONTENTION THAT THOUGH THE ASSESSMENT ORDER MAY BE THE BASIS F OR INITIATING THE PENALTY PROCEEDINGS, THE PENALTY PROCEEDINGS AR E INDEPENDENT OF ASSESSMENT PROCEEDINGS AND THE ASSESSEES CONTEN TION DURING THE PENALTY PROCEEDINGS HAVE TO BE DEALT WITH BY TH E AUTHORITIES BELOW. THEREFORE, WE DEEM IT FIT AND PROPER TO REMA ND THE ISSUE ON MERITS TO THE FILE OF THE AO FOR RECONSIDERATION ON MERITS AFTER CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE BEFO RE HIM. ITA 1105 OF 2013 JOSEPH RATNA KUMAR HYDERABAD PAGE 6 OF 6 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH DECEMBER, 2016. VINODAN/SPS COPY TO: 1 SRI K.VASANT KUMAR, A.V.RAGHURAM & P VINOD, ADVOC ATES, FLAT NO.610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500001 2 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6(1) HY DERABAD 3 CIT (A)-GUNTUR 4 CIT III HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER